House price stagnation continues

House prices continued to stagnate in May as they fell by 0.2 per cent on a month-on-month basis, according to Nationwide's index.

The average house price in the UK was £213,618, as annual growth fell to 2.4 per cent, roughly in line with consumer inflation.

House prices have now fallen on a monthly basis in three of the past four months while annual house price growth has been fluctuating between 2 and 3 per cent for the past 14 months.

This fluctuation has put house price inflation broadly in line with rises in the prices of general consumer good and services, which have also been moving between the same range over this period.

Robert Gardner, Nationwide's chief economist, said these rises and falls between a fairly narrow range suggested little change in the balance between demand and supply.

He said: "There are few signs of an imminent change. Surveyors continue to report subdued levels of new buyer enquiries, while the supply of properties on the market remains more of a trickle than a torrent.

"Looking further ahead, much will depend on how broader economic conditions evolve, especially in the labour market, but also with respect to interest rates.

"Subdued economic activity and ongoing pressure on household budgets is likely to continue to exert a modest drag on housing market activity and house price growth this year, though borrowing costs are likely to remain low. Overall, we continue to expect house prices to rise by around 1 per cent over the course of 2018."

Nationwide also highlighted the fact that the proportion of housing stock owned by private landlords had seen a small decline in 2017, following a series of government interventions on stamp duty and mortgage interest tax.

But despite this, the stock of privately rented dwellings still accounts for 20 per cent of the total, double the proportion in 1997.

There has also been a decline in the proportion of homeowners from 68 per cent to 63 per cent and in the proportion of social landlords from 22 per cent to 17 per cent.

The figures for 2017 from the Ministry of Housing, Communities and Local Government showed there were 4.8m houses in the private rented sector, 15.1m which were owner-occupied and 4.1m in the social rented sector.